How to claim tax benefits on health Insurance?

When you think of health insurance and medical policies, the first thing that comes to mind is premiums. While it’s true that insurance adds on with expensive premiums, it gives you assurance and safety from hefty medical bills. Medical emergencies and accidents can be unpredictable, and can sometimes leave a dent in your savings. By getting insurance, you can protect yourself and pay attention to your health. Moreover, the government is giving you a benefit to get health insurance by providing tax deductions.

As per the Indian IT Act, the government has introduced Section 80D (under the old tax regime), which allows taxpayers to claim tax deductions on premiums. This means that you can save on taxes and get health coverage by getting a medical plan. So, if you are an individual taxpayer with a tax liability, claiming health insurance tax benefitseems like a win. Let’s take a look at how you can claim these benefits.

Know your eligibility

Before filing for tax benefits under Section 80D, you should understand whether or not your insurance qualifies for it. This deduction is only applicable for individual and HUF tax profiles and for self and family insurance. This means that any premium you pay for yourself, spouse, dependent kids and parents can be filed under this section.

An important point to note with these payments is that only digital payments qualify as valid payments for tax deductions.

Setting the limits for tax deductions

While the IT Act doesn’t define any limits on your medical insurance, the tax deductions are capped at INR 25000 for each eligible member. Therefore, for a family of four, you can claim up to 1 lakh as a deduction. So, when you are signing up for your insurance plan, make sure you have all members enrolled in the policy. Therefore, giving you the chance to maximise your returns

Not all insurance policies give you the benefits

When buying medical health insurance, it is often advised to understand the terms and conditions of the policy. This includes understanding the coverage, the exclusions, the diseases covered and the waiting periods. But apart from that you also have to understand the duration of the plan and its tax benefits. Most best health insurance plan in India offer different policy coverages like individual, family, floaters, and critical health coverage. And most of these insurance plans are eligible for tax benefits. But if they are part of group health coverage or a corporate plan, you cannot claim tax benefits for the premium.

To file for the tax benefits as part of your income tax return, you need the payment details. The tax filing document has a dedicated segment, Section 80D, that has relevant questions related to health insurance tax benefits. So to avail benefits, you have to provide the necessary details including total payments. The Income Tax department does not require you to submit any proof, but insurance companies do disclose relevant information about their policyholders. So, it is important to retain proofs for future reference and provide correct details.